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The Hidden Costs Behind Your Solar Power System

Understanding how government rebates are working can be a little overwhelming. Government legislations are usually never easy to understand and the solar incentive granted under the Small-scale Renewable Energy Scheme (SRES) is no different.

To help you True Value Solar has outlined the main facts:

There are two common incentives for having Solar Power Systems:

  1.   Feed in Tariffs (FITs)
  2.   Government rebates

The FITs is a reimbursement set by the government for the surplus energy your solar panels producing. Prices of FITs have now been dropped to 5-6 cent per kWh which will be granted as a credit on your electricity bill provided by your energy supplying company (in some states they are set by the government). A far cry from the original price offered by the government of 60c per kWh.

Many consumers thought once the massive FITs ended, any help from the government stopped as well. This is not the case. The Government rebates are still active and are currently at about highest amount they can be. Let us explain:

The solar government rebate (SRES) subsidises the upfront cost of installing a solar system and is not means tested in any way.

The only criteria for claiming it are:

  •   Your system is less than 100 kW in size
  •   You get it installed and designed by a Clean Energy Council accredited professional
  •   You use panels and inverters that are approved for use in Australia by the Clean Energy Council

Almost all homes and small businesses would easily fall under the above criteria with a solar
power system installed by True Value Solar.

Understanding how government rebate works:

The government creates Renewable Energy Certificates (RECs).

The government mandates that the companies who are operating fossil fuel generators and also big electricity consuming businesses have to either build a certain amount of renewable generation systems (e.g. wind turbines, solar systems, etc.) or purchase the right of electricity produced by renewable energy systems (such as your new solar system) in the form of RECs.

When you buy a solar power system, the government gives you a certain number of RECs depending on how big your system is and in which part of Australia you are located.

The type of RECs that you get for a residential solar system are called “Small-Scale Technology Certificates” (STCs).

Solar installation companies often deduct the STC value off the system purchase price to pass on the savings to households or small businesses.

The STC price is a bit like a share price – it fluctuates depending on supply and demand of certificates. E.g. when the solar industry is booming (usually just before the rebate is cut!) then STC price would be likely to drops and vice versa.

<em>The current STC price at time of writing is about $39.90.</em>

Now here is the reason why you need to act now

The amount of rebate you can claim depends on the current market price of an STC. At the current market STC price (about $39.90), the ‘rebate’ is worth roughly $710 per kW installed in Victoria/Tasmania and about $827 per kW installed in mainly all other states. In times of high demand for solar installations, lots of STC’s are created.

A few years ago, when the government really looked like it was going to abolish the rebate entirely, demand for solar installations caused the price of STC’s to drop to $17.50 – less than half of what it is now.

So if you get a 3kW system today, we would claim the ‘rebate’ of $2,130 (3kW x $710 = $2,130; Example based on VIC/TAS). However, if demand for solar goes up due to the upcoming double dissolution election resulting in the SREC being scrapped  the certificate price could drop to $17.50 again and we only would be able to claim a ‘rebate’ of around $930 for the exact same system.

To sum up, the STC price can only go down from their current position, as they has a fixed ceiling price of $40.  If so the price of solar systems will increase. True Value Solar advises their customers to take advantage of the current certificate situation before they drop.

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